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THIRD DIVISION

TRIFONIA D. GABUTAN, deceased, G.R. Nos. 185857-58

herein represented by her heirs,
namely: Erlinda Llames, Elisa Asok,
Primitivo Gabutan, Valentina Yane;
BUNA D. ACTUB, FELISIA
TROCIO, CRISANTA D. UBAUB,
and TIRSO DALONDONAN,
deceased, herein represented by his
heirs, namely: Madelyn D. Reposar
and Jerry Dalondonan, MARY JANE
GILIG, ALLAN UBAUB, and
SPOUSES NICOLAS & EVELYN
DAILO,
Petitioners,

-versus-

DANTE D. NACALABAN, HELEN

N. MAANDIG, SUSANN. SIAO, and
CAGAYAN CAPITOL COLLEGE,
Respondents.

x- - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - x

DANTE D. NACALABAN, HELEN G.R. Nos. 194314-15

N. MAANDIG, and SUSAN N. SIAO,
as HEIRS OF BALDOMERA D.
VDA. DE NACALABAN,
Petitioners,

-versus-

TRIFONIA D. GABUTAN, BUNA D.

ACTUB, FELISIA D. TROCIO,
CRISANTA D. UBAUB, and TIRSO
DALONDONAN, deceased, herein
represented by his heirs, namely:
Madelyn D. Reposar and Jerry
Dalondonan, MARY JANE GILIG,(
 Decision 2 G.R. Nos. 185857-58
& 194314-15

ALLAN UBAUB, and SPOUSES

NICOLAS & EVELYN DAILO,
CAGAYAN CAPITOL COLLEGE,
represented by its President, Atty.
Casimiro B. Suarez, Jr.,
Private Respondent;

HON. LEONCIA R. DIMAGIBA

(Associate Justice), HON. PAUL L.
HERNANDO (Associate Justice),
HON. NINA G. ANTONIO-
V ALENZUELA (Associate Justice),
HON. EDGARDO T. LLOREN Present:
(Associate Justice), HON. MICHAEL VELASCO, JR., J., Chairperson
P. ELBINIAS (Associate Justice), and PERALTA,
HON. JANE AURORA C. LANTION PEREZ,
(Associate Justice, Acting Chairman), REYES, and
COURT OF APPEALS, CAGAYAN JARDELEZA, JJ.
DE ORO CITY (Former Special
Twenty-Second Division),
Public Respondents. Promulgated:

June 29, 2016

x--------------------------------------------- -~~ ~~-- - -x

DECISION

JARDELEZA, J.:

Before us are consolidated petitions questioning the Court of Appeals'

(CA) Decision' dated December 11, 2008 and Resolution 2 dated August 17,
2010 in CA-G.R. CV No. 68960-MIN and CA-G.R. SP No. 53598-MlN. 3 In
G.R. Nos. 185857-58, the heirs of Trifonia D. Gabutan and Tirso
Dalondonan, Buna D. Actub, Felisia Trocio and Crisanta D. Ubaub
(Gabutan, et al.) filed a partial appeal by way of a petition for review on
4
certiorari, seeking to reverse the portion of the CA Decision declaring
Cagayan Capital College (the College) as a buyer in good faith. The other
petition, G .R. Nos. 194314-] 5, is one for certiorari5 filed by Dante D.
Nacalaban, Helen N. Maandig, and Susan N. Siao as heirs of Baldomera D.
Vda. De Nacalaban (Nacalaban, et al.). It seeks to annul the CA Decision
and Resolution which sustained the action for reconveyance filed by
Gabutan, et al.

Rollo (G.R. Nos. 185857-58), pp. 78-96. Penned by Associate Justice Edgardo T. Lloren with
Associate Justices Jane Aurora C. Lantion and Michael P. Elbinias concurring.
Rollo (G.R. Nos. 194314-14), pp. 40-42. Penned by Associate Justice Leoncia R. Dimagiba with
Associate Justices Ramon Paul L. Hernando and Nina G. Antonio-Valenzuela concurring.
Consolidated via CA Resolution dated O?to er 7, 2004, rollo (G.R. No. 185857-58), p. 84.
Rollo (G.R. Nos. 185857-58), pp. 33-75.
Rollo (G.R. Nos. 194314-15), pp. 3-17.
 Decision 3 G.R. Nos. 185857-58
& 194314-15

The Antecedents

On January 25, 1957, Godofredo Nacalaban (Godofredo) purchased

an 800-square meter parcel of prime land (property) in Poblacion, Cagayan
de Oro City from Petra, F ortunata, Francisco and Dolores, all surnamed
Daamo. 6 Pursuant to the sale, Transfer Certificate of Title (TCT) No. T-
2259 7 covering the property was issued in the name of Godofredo. He
8
thereafter built a house on it.

Godofredo died on January 7, 1974. 9 He was survived by his wife,

Baldomera, and their children, Dante, Helen, and Susan. On March 19,
1979, Baldomera issued a Certification 10 in favor of her mother, Melecia. It
provided, in effect, that Baldomera was allowing her mother to build and
occupy a house on the portion of the property. 11 Accordingly, the house was
declared for taxation purposes. The tax declaration 12 presented in evidence
showed that Melecia owned the building on the land owned by Godofredo. 13

Baldomera died on September 11, 1994. 14 On July 3, 1996, her

children executed an Extrajudicial Settlement of Estate of Deceased Person
with Sale 15 (Extrajudicial Settlement with Sale) where they adjudicated unto
themselves the property and sold it to the College. On August 22, 1996, TCT
No. T-2259 was cancelled and TCT No. T-111846 16 covering the property
was issued in the name of the College. 17
8
Melecia died on April 20, 199?1 and was survived by her children,
Trifonia, Buna, Felisia, Crisanta, and Tirso.

In a letter 19 dated May 5, 1997, the College demanded Trifonia D.

Gabutan, Mary Jane Gilig, Allan Ubaub, and Evelyn Dailo, the heirs of
Melecia who were occupying the house on the property, to vacate the
20
premises.

On July 7, 1997, Gabutan, et al. filed a Complaint for Reconveyance

of Real Property, Declaration of Nullity of Contracts, Partition and Damages
with Writ of Preliminary Attachment and Injunction 21 against Nacalaban, et
al. and the College. They alleged that: ( 1) Melecia bought the property using
6
Evidenced by a Deed of Conditional Sale, rollo (G.R. Nos. 185857-58), pp. 79-80, 215.
Id. at 209.
Id. at 80.
9 Id.
10
Rollo (G.R. Nos. 185857-58), p. 541.
11
Id. at 80.
12
Id. at 542.
i:i Id. at 80.
14 Id.
15
Rollo (G.R. Nos. 185857-58), pp. 110-111.
16
Id. at 205.
17
Id. at 80-81.
18
Id. at 97, 191.
19

20 /datll2. (
Id. at 81.
?I
- Id. at97-107
 Decision 4 G.R. Nos. 185857-58
& 194314-15

her own money but Godofredo had the Deed of Absolute Sale executed in
his name instead of his mother-in-law; 22 (2) Godofredo and Baldomera were
only trustees of the property in favor of the real owner and beneficiary,
Melecia; 23 (3) they only knew about the Extrajudicial Settlement with Sale
upon verification with the Registry of Deeds; 24 and (4) the College was a
25
buyer in bad faith, being aware they were co-owners of the property.
26
In its Answer with Affirmative Defenses, the College claimed that it
is a buyer in good faith and for value, having "made exhaustive
investigations and verifications from all reliable sources" that Melecia and
her heirs were staying in the property by mere tolerance. 27 It alleged that: ( l)
28
in the tax declaration of the residential house, Melecia admitted that the lot
owner is Godofredo; 29 (2) the occupancy permit of Melecia was issued only
after Godofredo issued a certification30 to the effect that Melecia was
allowed to occupy a portion of the property; 31 and (3) the Extrajudicial
Settlement with Sale was published in three consecutive issues of Mindanao
Post, a newspaper of general circulation. 32

In their Answer with Counterclaim, 33 Nacalaban, et al. denied the

allegations of Gabutan, et al. They claimed to have acquired the property by
intestate succession from their parents, who in their lifetime, exercised
unequivocal and absolute ownership over the property. 34 Nacalaban, et al.
also set up the defenses of laches and prescription, and asserted that the
action for reconveyance was improper because the property had already
been sold to an innocent purchaser for value. 35

On September 10, 1997, the College filed a separate Complaint for

Unlawful Detainer and Damages 36 with the Municipal Trial Court in Cities
(MTCC) against Trifonia, Mary Jane, Allan, Evelyn and Nicolas Dailo
(Heirs of Melecia). In their Answer with Affirmative and/or Negative
Defenses with Compulsory Counterclaim, 37 the J-leirs of Melecia claimed
that they own and possess the property in co-ownership with Nacalaban, et
al. and Gabutan, et al. because it was purchased by Melecia, their common
38
predecessor. They also claimed that the house in which they reside was

22
Id. at 98.
21
Id. at 99.
24
Id. at IOI.
25
Id. at l 00.
26
Id. at 132--138.
27
Id. at 133.
28
Id. at 139.
29
Id. at 134.
30
Id at 140.
31
Id. at 133-134.
32
Id at 134, 141.
33
Id. at 123-131.
34
Id. at 127.
35

y, Id. at
Id. 128.
at 175-178. '
37
Id. at 184-188.
38
Id. at 184-185 ..
 Decision 5 G.R. Nos. 185857-58
& 194314-15

39
constructed at her expense. The College had prior knowledge of this co-
ownership, and hence, was a purchaser in bad faith. 40 The Heirs of Melecia
also raised the defense of forum-shopping in view of the pendency of the
action for reconveyance. 41 They then concluded that in view of the issues
and the value of the property, as well, the MTCC had no jurisdiction over
42
the case.

The MTCC found it had jurisdiction to hear the case and ruled m
favor of the College: 43

WHEREFORE, JUDGMENT is hereby rendered

ordering each of the defendants to:

a.) Immediately vacate the property of the plaintiff;

b.) Pay the plaintiff the monthly use compensation for
the continued use of the property at the rate of
P500.00 per month from MAY 5, 1997 until the
property is actually vacated;
c.) Pay the plaintiff Attorney's fees amounting to
P5,000.00 per defendant;
d.) Pay for litigation expenses at the rate of Pl,000.00
per defendant.

SO ORDERED. 44

On appeal, the Regional Trial Court (RTC) affirmed the MTCC's

Decision 46 in all respects, except that the Heirs of Melecia were given 30
days from notice to vacate the property. 47 They filed a motion for
49
reconsideration, but it was denied. Thus, the Heirs of Melecia filed a
petition for review 50 before the CA, docketed as CA-G.R. SP No. 53598. 51

Meanwhile, in the reconveyance case, the RTC rendered a Decision52

in favor of Gabutan, et al. The RTC found the testimonies of their witnesses
credible, in that the money of Melecia was used in buying the property but
the name of Godofredo was used when the title was obtained because
Godofredo lived in Cagayan de Oro City while Melecia lived in Bornay,
53
Gitagum, Misamis Oriental. Thus, the RTC held that a trust was
established by operation of law pursuant to Article 1448 of the Civil Code. 54
The dispositive portion of the RTC's Decision reads:

39
Id. at 185.
40 Id.
41 Id.
42
Rollo (G.R. Nos. 185857-58), pp. 185-186.
43
ld.at231-237.
44
Id. at 237.
46
Id. at 293-302.
47
Id. at 301-302.

i
49
Id. at 321-322.
so Id. at 326-346.
51
Id. at 82.
52
53
Id. at 557-568.
Id. at 558.
54
ld.at561-565.
Decision 6 G.R. Nos. 185857-58
& 194314-15

WHEREFORE, judgment is hereby rendered, and this

Court hereby:

1. Declares that the Spouses Godofredo and

Baldomera Nacalaban held the land covered by
Transfer Certificate of Title No. T-2259 issued in
the name of Godofredo Nacalaban married to
Baldomera Dalondonan issued on January 13, 1959
in trust for Melecia V da. de Dalondonan with the
Spouses as the trustees and Melecia V da. de
Dalondonan as the cestui que trust;

2. Declares that upon the death of Melecia V da. de

Dalondonan on August 20, 1997, the ownership and
beneficial interest of the foregoing Land passed to
the plaintiffs and individual defendants by operation
of law as legal heirs of Melecia V da. de
Dalondonan;

3. Nullifies the Extrajudicial Settlement of Estate of

Deceased Person with Sale executed by the
individual defendants on July 30, 1996 and known
as Doc. No. 326; Page No. 67; Book No. XX; Series
of 1996 in the Notarial Register of Notary Public
Victoriano M. Jacot with respect to the Extrajudicial
settlement by the individual defendants of the land
referred to above;

4. Declares that defendant Cagayan Capitol College

was a buyer in good faith and for value of the land
referred to above, and, accordingly, declares that
said defendant now owns the land;

5. Orders defendant Cagayan Capitol College to

inform this Court in writing within thirty (30) days
from receipt of this decision the amount of the
purchase price of the land referred to above bought
by it from the individual defendants the amount of
which should approximate the prevailing market
value of the land at the time of the purchase;

6. Orders the individual defendants namely, Dante D.

Nacalaban, Helen N. Maandig, and Susan N. Siao,
jointly and severally, to deliver and turn over to the
plaintiffs, within thirty (30) days from receipt of
this decision, plaintiffs' shares of the proceeds of
the sale of the land referred to above the amount of
which is equivalent to five-sixth (5/6) of said
proceeds with the remaining one-sixth (1/6) to be
retained by the individual defendants as their share

v
by virtue of theiJing the legal heirs of Baldomera
D. Nacalaban;
 Decision 7 G.R. Nos. 185857-58
& 194314-15

SO ORDERED. 55

Both parties filed separate appeals from this Decision before the CA. 57
In a Resolution 58 dated October 7, 2004, the CA consolidated both appeals.
59
The CA rendered its Decision on December 11, 2008 dismissing the
consolidated appeals and affirming in toto the RTC Decisions in the
unlawful detainer case and the action for reconveyance. The CA held that:
( 1) the defense of co-ownership based on an implied trust by a defendant in
an unlawful detainer case shall not divest the MTCC of jurisdiction over the
case; 60 (2) the dead man's statute does not apply because Gabutan, et al.'s
counsel did not interpose any objection when the testimony of Crisanta
Ubaub was offered and Gabutan, et al.'s counsel even examined her; 61 (3)
Nacalaban, et al.'s claim that Gabutan, et al.'s witnesses are not competent
to testify on matters which took place before the death of Godofredo and
Melecia is without merit because Gabutan, et al. have not specified these
witnesses and such hearsay evidence alluded to; 62 ( 4) the parole evidence
rule does not apply because Melecia and Nacalaban, et al. were not parties to
63
the Deed of Conditional Sale; (5) the action for reconveyance has not yet
prescribed because Gabutan, et al. are in possession of the property; 64 and
(6) the College is a buyer in good faith. 65

Nacalaban, et al. filed their motion for reconsideration of the CA

Decision, but it was denied in a Resolution 66 dated August 17, 2010. Hence,
they filed the present petition for certiorari67 under Rule 65, where they
allege that: (1) the action for reconveyance already expired; 68 (2) for an
action for reconveyance to prosper, the property should not have passed into
the hands of another who bought the property in good faith and for value; 69
and (3) the title of Godofredo under TCT No. T-2259 which was issued on
January 13, 1959 could not be attacked collaterally. 70

On the other hand, Gabutan, et al. filed the present petition for review
71
on certiorari under Rule 45, seeking a partial appeal of the CA Decision.
In their petition, Gabutan, et al. allege that the College is not a buyer in good
faith because it did not buy the property from the registered owner. 72 Since

55
Id. at 567-568.
57
Id. at 79.
58
Id. at 614-615.
59
Id. at 78-96.
60
Id. at 88.
61
Id. at 90.
62
Id. at 90-91.
63
Id. at 91.
64
Id. at 93-94.
65
Id. at 95.
66
Rollo (G.R. Nos. 194314-15), pp. 40-42.
67
Id. at 3-17.
68
Id. at 7-8.
69 Id.
70 1
Rollo (G.R. No/s. 94314-15), pp. 10-11.
71
Rollo (G.R. Nos 185857-58), pp. 33-75.
72
Id. at 56-57.
 Decision 8 G.R. Nos. 185857-58
& 194314-15

Godofredo was the registered owner of the property and not Nacalaban, et
al., the College should have exercised a higher degree of prudence in
establishing their capacity to sell it. 73 Further, despite knowing that other
persons possessed the property, the College did not inquire with Gabutan, et
al. the nature of their stay on the property. 74 Under Section 1, paragraph 2,
Rule 7 4 of the Rules of Court, the publication of the Extrajudicial Settlement
with Sale was also without prejudice to claims of other persons who had no
notice or participation thereof. 75 Finally, Gabutan, et al. argue that they
cannot be ejected from the prope1iy because there is no evidence to show
that their stay was by mere tolerance, and that Melecia was a builder in good
faith. 76

Considering that the petitions assail the same CA Decision and

involve the same parties, we issued a Resolution 77 dated December 13, 2010
consolidating them.

The Issues

The issues for resolution are:

1. Whether the petition for certiorari of Nacalaban, et al. shall prosper;

2. Whether the action for reconveyance was proper; and
3. Whether the College is a buyer in good faith.

Our Ruling

I. The petition for certiorari of

Nacalaban, et al. is a wrong
remedy

Pursuant to Section 1, Rule 45 of the Rules of Court, 78 the proper

remedy to obtain a reversal of judgment on the merits, final order or
resolution is an appeal. The Resolution dated August 17, 2010 of the CA,
which affirmed its Decision dated December 11, 2008, was a final
resolution that disposed of the appeal by Nacalaban, et al. and left nothing
more to be done by the CA in respect to the said case. Thus, Nacalaban, et
al. should have filed an appeal in the form of a petition for review on
certiorari and not a petition for certiorari under Rule 65, which is a special
civil action.
73
Id. at 57-58.
74
Id. at 58.
75
Id. at 62-63.
76
Id. at 65, 68-69.
77
Id. at 816-8 17.
78
Section I. Filing of petition with Supreme Courl.-A party desiring to appeal by certiorari from a
judgment, final order or resolution of the Court of Appeals, the Sandiganbayan, the Court or Tax
Appeals, the Regional Trial Court or other courts, whenever authorized by law, may file with the
Supreme Court a verified petition for review on certiorari. The petition may include an application for a
writ of preliminary injunction or other provisional remedies and shall rai'eo ly questions of law, which
must be distinctly set forth. The petitioner may seek the same provisional medies by verified motion
filed in the same action or proceeding at any time during its pendency.
 Decision 9 G.R. Nos. 185857-58
& 194314-15

Rule 65 is a limited form of review and is a remedy of last recourse.

This extraordinary action lies only where there is no appeal nor plain, speedy
and adequate remedy in the ordinary course of law. 79 In Malayang
Manggagawa ng Stayfast Phils., Inc. v. National Labor Relations
Comission, 80 we held that appeal would still be the proper remedy from a
judgment on the merits, final order or resolution even if the error ascribed to
the court rendering the judgment is its lack of jurisdiction over the subject
matter, or the exercise of power in excess thereof, or grave abuse of
discretion in the findings of fact or of law set out in the decision, order or
resolution. The existence and availability of the right of appeal prohibits the
resort to certiorari because one of the requirements for the latter remedy is
81
that there should be no appeal. We have always declared that a petition for
certiorari is not a substitute for an appeal where the latter remedy is
available but was lost through fault or negligence. 82

Here, Nacalaban, et al. received the assailed Resolution dated August

17, 2010 on September 7, 2010. 83 Under the Rules of Court, they had 15
days or until September 22, 2010 to file an appeal before us. Nacalaban, et
al. allowed this period to lapse without doing so and, instead, filed a petition
for certiorari on November 5, 2010. 84 Being the wrong remedy, the petition
of Nacalaban, et al. is, therefore, dismissible. Although there are
85
exceptions to this general rule, none applies in this case.

In spite of the consolidation we have ordered, we cannot treat the

petition of Nacalaban, et al. as one under Rule 45. We have the discretion to
treat a Rule 65 petition for certiorari as a Rule 45 petition for review on
certiorari if (I) the petition is filed within the reglementary period for filing
a petition for review; (2) when errors of judgment are averred; and (3) when
there is sufficient reason to justify the relaxation of the rules. 86 The first and
third requisites are absent in this case. To reiterate, the petition was filed
beyond the 15-day reglementary period of filing a petition for review on
certiorari. As will be discussed, we also find no compelling reason to relax
the rules.

79
Malayang Manggagawa ng Stayfast I'hils., Inc. v. National labor Relations Commission, G.R. No.
155306, August 28, 2013, 704 SCRA 24, 36, citing Balayan v. Acorda, G.R. No. 153537, May 5, 2006,
489 SCRA 637, 641-642.
80
G. R. No. 155306, August 28, 2013, 704 SCRA 24.
81
Id. at 35-36, citing Bugarin v. Palisoc, G.R. No. 157985, December 2, 2005, 476 SCRA 587, 595-596.
82
Id. at 36.
83
Rollo (G.R. Nos. 194314-15), p. 4.
84
Id. at 3.
85
The exceptions are the following:
(a) when public welfare and the advancement of public policy dictates;
(b) when the broader interest of justice so requires;
(c) when the writs issued are null and void; or
(d) when the questioned order amounts to an oppressive exercise of judicial authority.
Hanjin Engineering and Construction Co., ltd. v. Court of Appeals, G.R. No. 165910, April 10, 2006,
487 SCRA 78, 100.
86
Tankeh v. Development1'a k of the Philippines, G.R. No. 171428, November 11, 2013, 709 SCRA 19,
44, citing China Banking rporation v. Cebu Printing and Packaging Corporation, G.R. No. 172880,
August 11, 2010, 628 SC A 154, 168, citing Tagle v. Equitable PC! Bank, G.R. No. 172299, April 22,
2008, 552 SCRA 424.
 Decision 10 G.R. Nos. 185857-58
& 194314-15

fl. The action for reconveyance

filed by Gabutan, et al. is
proper

a. An implied resulting trust was

created between Melecia and
Godo/redo

We stress at the outset that the question of existence of an implied

trust is factual, hence, ordinarily outside the purview of Rule 45. 87 The
resolution of factual issues is the function of the lower courts whose
findings, when aptly supported by evidence, bind us. This is especially true
when the CA affirms the lower court's findings, as in this case. While we,
under established exceptional circumstances, had deviated from this rule, we
88
do not find this case to be under any of the exceptions. Even if we were to
disregard these established doctrinal rules, we would still affirm the assailed
CA rulings.

Article 1448 of the Civil Code provides in part that there is an implied
trust when property is sold, and the legal estate is granted to one party but
the price is paid by another for the purpose of having the beneficial interest
of the property. The former is the trustee, while the latter is the beneficiary.
The trust created here, which is also referred to as a purchase money
resulting trust, 89 occurs when there is ( l) an actual payment of money,
property or services, or an equivalent, constituting valuable consideration;
(2) and such consideration must be furnished by the alleged beneficiary of a
resulting trust. 90 These two elements are present here.

Gabutan, et al., through the testimonies of F elisia, Crisanta, and

Trifonia, established that Melecia's money was used in buying the property,
but its title was placed in Godofredo's name. She purchased the property
because Felisia wanted to build a pharmacy on it. 91 On one occasion in
Melecia' s house, and when the entire family was present, Melecia gave
Godofredo the money to purchase the property. 92 Melecia entrusted the
money to Godofredo because he was in Cagayan de Oro, and per Melecia' s
instruction, the deed of sale covering the property was placed in his name. 93
It was allegedly her practice to buy properties and place them in her
children's name, but it was understood that she and her children co-own the
. 94
properties.

87
Tong v. Go Tiat Kun, G.R. No. 196023, April 21, 2014, 722 SCRA 623, 633.
88
Chu, Jr. v. Caparas, G.R. No. 175428, April 15, 2013, 696 SCRA 324, 333.
89
Tong v. Go Tiat Kun, supra at 635-636, citing Comilang v. Burcena, G.R. No. 146853, February 13,
2006, 482 SCRA 342, 350.
90
Pigao v. Rabanillo, G.R. No. 150712, May 2, 2006, 488 SCRA 546, 561, citing Morales v. Court of'
Appeals, G.R. No. yl 7228, June 19, 1997, 274 SCRA 282.
91
Rollo (G.R. Nos/ 185867-58), p. 560.
92
Id. at 559.
93
Id. at 558.
94
Id. at 560.
 Decision 11 G.R. Nos. 185857-58
& 194314-15

Melecia built a residential building on the property, where her

95
daughter Crisanta and some of her grandchildren resided. Godofredo also
thereafter built a house on the property. Twice, he also mortgaged the
property to secure loans. Melecia allowed him to do so because she trusted
him. 96 After Godofredo' s death, and when Baldomera fell ill, there were
family discussions to transfer the title in Melecia's name so Melecia's
children can divide it together with the rest of Melecia's properties. The
plans, however, always fell through. 97

Both the RTC and CA found credence on these pieces of testimonial

evidence that an implied resulting trust exists. Reliance on these testimonies
will not violate the parol evidence rule, as Nacalaban, et al. once raised. In
Tong v. Go Tiat Kun, 98 we ruled that since an implied trust is neither
dependent upon an express agreement nor required to be evidenced by
writing, Article 1457 of our Civil Code authorizes the admission of parol
evidence to prove their existence. What is crucial is the intention to create a
trust. 99 We cautioned, however, that the parol evidence that is required to
establish the existence of an implied trust necessarily has to be trustworthy
and it cannot rest on loose, equivocal or indefinite declarations. 100 The
testimonies of Felisia, Crisanta, and Trifonia satisfy these requirements.
They are consistent and agree in all material points in reference to the
circumstances behind the arrangement between Melecia and Godofredo. We
agree with the RTC when it said that this arrangement among family
members is not unusual, especially in the 1950s. 101

Nacalaban, et al., on the other hand, denied the arrangement between

Melecia and Godofredo, and maintained that it was really the latter who
purchased the property from its original owners, as evidenced by their
possession of the Deed of Conditional Sale and the title being in
Godofredo's name. 102 It is telling, however, that Nacalaban, et al. failed to
provide the details of the sale, specifically with regard to how Godofredo
could have been able to afford the purchase price himself, which would have
directly refuted the allegation that Melecia's money was used in the
purchase. As the RTC aptly observed, if Godofredo really bought the
property with his own money, it was surprising that Baldomera did not
transfer the title of the property to her name when Godofredo died in 1974.
Baldomera did not do so until her death in 1994 despite being pressed by her
siblings to partition the property. The RTC correctly deduced that this only
meant that Baldomera acknowledged that the property belongs to Melecia. 103

95 Id.
96 Id.
97
Rollo (G.R. Nos. 185867-58), p. 559.
98
G.R. No. 196023, April 21, 2014, 722 SCRA 623.
99
Id. at 636-637.
100
Id. at 637, citing Estate of'Margarita D. Cahacungan v. Laigo, G.R. No. 175073, August 15, 2011,
655 SCRA 366, 380.
101
Rollo (G.R. No?. 18 867-58), pp. 561-562.
102
Id. at 123-124.
103
Id. at 561-562.
 Decision 12 G.R. Nos. 185857-58
& 194314-15

Having established the creation of an implied resulting trust, the

action for reconveyance filed by Gabutan, et al., the heirs of Melecia in
whose benefit the trust was created, is proper. An action for reconveyance is
a legal and equitable remedy granted to the rightful landowner, whose land
was wrongfully or erroneously registered in the name of another, to compel
104
the registered owner to transfer or reconvey the land to him. It will not
amount to a collateral attack on the title, contrary to the allegation of
Nacalaban, et al. 105 We explained in Hortizuela v. Tagufa: 106

x x x As a matter of fact, an action for reconveyance is

a recognized remedy, an action in personam, available to a
person whose property has been wrongfully registered
under the Torrens system in another's name. In an action
for reconveyance, the decree is not sought to be set aside. It
does not seek to set aside the decree but, respecting it as
incontrovertible and no longer open to review, seeks to
transfer or reconvey the land from the registered owner to
the rightful owner. Reconveyance is always available as
long as the property has not passed to an innocent third
person for value.

There is no quibble that a certificate of title, like in the

case at bench, can only be questioned through a direct
proceeding. The MCTC and the CA, however, failed to
take into account that in a complaint for reconveyance, the
decree of registration is respected as incontrovertible and is
not being questioned. What is being sought is the transfer
of the propc1iy wrongfully or erroneously registered in
another's name to its rightful owner or to the one with a
better right. If the registration of the land is fraudulent, the
person in whose name the land is registered holds it as a
mere trustee, and the real owner is entitled to file an action
for reconveyance of the property. 107

The fact that the property was already titled in Godofredo's name,
and later transferred to the College, is not a hindrance to an action for
reconveyance based on an implied trust. The title did not operate to vest
ownership upon the property in favor of the College. As held in Naval v.
Court of Appeals: 108

x x x Registration of a piece of land under the Torrens

System does not create or vest title, because it is not a
mode of acquiring ownership. A certificate of title is
merely an evidence of ownership or title over the particular
property described therein. It cannot be used to protect a
usurper from the true owner; nor can it be used as a shield
for the commission of fraud; neither does it permit one to
104
Hortizuela v. Tagufa, G.R. No. 205867, February 23, 2015, 75 l SCRA 371, 386-387 citing Leoveras v.
Valdez, G.R. No. 169985, June 15, 2011, 652 SCRA 61, 71.
105
Rol/o(G.R.Nos.194314-15),pp.10-ll.
106
G.R. No. 205867, February 23, 2015, 751SCRA371.
107
Id.at 381-382, citing Campos v. Ortega, Sr., G.R.
emphasis omitted.
Ni. 1286, June 2, 2014, 724 SCRA 240, 257;
108
G.R. No. 167412, february 22, 2006, 483 SCRA 102.
 Decision 13 G.R. Nos. 185857-58
& 194314-15

enrich himself at the expense of others. Its issuance in favor

of a particular person does not foreclose the possibility that
the real property may be co-owned with persons not named
in the certificate, or that it may be held in trust for another
. 109
person by the registered owner.

Moreover, the body of the Complaint filed by Gabutan, et al. shows

that it is not only for the reconveyance of the property but also for the
110
annulment of TCT No. T-111846 issued in the name of the College.
Gabutan, et al. questioned the validity of the sale to the College and claimed
co-ownership over the property. Thus, we can rule on the validity of TCT
No. T-111846 since the Complaint is a direct attack on the title of the
College.

b. The action for reconveyance is

imprescriptible because the
plaintiffs are in possession of
the property

An action for reconveyance based on an implied or a constructive

trust prescribes 10 years from the alleged fraudulent registration or date of
issuance of the certificate of title over the property. However, an action for
reconveyance based on implied or constructive trust is imprescriptible if the
plaintiff or the person enforcing the trust is in possession of the property. In
effect, the action for reconveyance is an action to quiet the property title,
which does not prescribe. 111 The reason is that the one who is in actual
possession of the land claiming to be its owner may wait until his possession
is disturbed or his title is attacked before taking steps to vindicate his right.
His undisturbed possession gives him a continuing right to seek the aid of a
court of equity to ascertain and determine the nature of the adverse claim of
a third party and its effect on his own title, which right can be claimed only
. . . 112
b y one wh o is m possession.

The fact of actual possession of Gabutan, et al. of the property, during

the lifetime of Melecia and even after her death, is an undisputed and
established fact. The College has even filed an ejectment case against the
113
Heirs of Melecia for this reason. Thus, their complaint for reconveyance is
imprescriptible. It follows, with more reason, that Gabutan, et al. cannot be
held guilty of !aches as the said doctrine, which is one in equity, cannot be
set up to resist the enforcement of an imprescriptible legal right. 114

109
Id. at 113.
110
Rollo (G.R. Nos. 185857-58), pp. 378-380.
111
Francisco v. Rojas, G.R. No. 167120, April 23, 2014, 723 SCRA 423, 455, citing Vda. de Cabrera v.
Court of Appeals, G.R. No. 108547, February 3, 1997, 267 SCRA 339.
112
Ney v. Quijano, G.R. No. 178609, August 4, 2010, 626 SCRA 800, 808, citing Mendizabel v. Apao,

f
G.R. No. 143185, February 20, 2006, 482 SCRA 587, 609.
113
Rollo (G.R. Nos. 185857-58), pp. 175-178.
'" See BHo, Sr. ' D;aao/ a, G. R. No. 171717, Dewnb" 15, 20 JO, 638 SCRA 529, 539.
 Decision 14 G.R. Nos. 185857-58
& 194314-15

III. The property shall be

reconveyed to the estate of
Melecia

a. The Extrajudicial Settlement with Sale

executed between Nacalaban, et al.
and the College is void

Having established the creation of an implied resulting trust between

Melecia and Godofredo, the law thereby creates the obligation of the trustee
115
to reconvey the property and its title in favor of the true owner. The true
owner, Melecia, died in 1997 and was succeeded by her children and
grandchildren. The property, therefore, must be reconveyed to her estate.

The execution of the Extrajudicial Settlement with Sale between

Godofredo's heirs and the College will not defeat the legal obligation to
reconvey the property because at the time of its execution in 1996, Melecia
was still alive. Hence, Nacalaban, et al. did not have the right or authority to
sell the property. Nemo dat quad non habet. One can sell only what one
owns or is authorized to sell, and the buyer can acquire no more right than
what the seller can transfer legally. 116 Nacalaban, et al. cannot find refuge in
their argument that the property was registered in their father's name and
that after his death, his rights passed to them as his legal heirs. To repeat,
title to property does not vest ownership but is a mere proof that such
.
property 11as b een reg1stere d . 117

b. The College is a buyer in bad

faith

Despite the finding that the property was owned by Melecia and upon
her death, by her heirs, the lower courts still sustained the ownership of the
College of the property on the ground that it is an innocent purchaser for
118
value. The lower courts' findings are grounded on the following: (i)
Gabutan, et al. 's claim was never annotated on Godofredo's title; (ii) the
Extrajudicial Settlement with Sale was duly published and the College was
able to effect the transfer of the title in its name; (iii) Baldomera issued a
certification in favor of Melecia allowing her to occupy a portion of the lot;
and (iv) the tax declaration showed that Melecia owned only the building on
the land owned by Godofredo. 119

The R TC reiterated the rule that the buyer of a land registered under
the Torrens System may rely upon the face of the certificate of title and does
120
not have to look beyond it. The CA, on the other hand, held that when
115
Brito, Sr. v. Dianala, supra at 537.
116
Midway Maritime and Technological Foundation v. Castro, G.R. No. 189061, August 6, 2014, 732
SCRA 193, 200, citing Rzdloe v. Burgos, G.R. No. 143573, .January 30, 2009, 577 SCRA 264, 272.
117
Tong v. Go Tiat Kun, supra note 98 at 637.
118

119
Rollo (G.R.;o. 185857-58), p. 567.
Id at 95.
120
Id. at 567.
 Decision 15 G.R. Nos. 185857-58
& 194314-15

taken together, these facts would reasonably constitute enough reason for the
College or any buyer to conclude that the property is free from any adverse
claim, thereby making any further investigation unnecessary. Absent any
showing that the College knew of the actual arrangement between
121
Godofredo and Melecia, it must be deemed a buyer in good faith.

Gabutan, et al. alleged that the lower courts erred in ruling that the
College is a buyer in good faith, raising the following: (1) Nacalaban, et al.
are not the registered owners of the property; Godofredo is the registered
122
owner who died on January 7, 1974; (2) not being the registered owners,
the College, as buyer, is expected to examine not only the certificate of title
but all factual circumstances necessary for him to determine if there are any
flaws in the title of the transferor, or in his capacity to transfer the
property; 123 and (3) the College knew that other persons possessed the
property so it should have first established the capacity of the Nacalaban
children to sell the property. 124

Whether one is a buyer in good faith and whether due diligence and
prudence were exercised are questions of fact. 125 As we have already
mentioned, only questions of law may be raised in a petition for review on
certiorari under Rule 45 of the Rules of Court. We see an exception,
however, to this general rule relative to the finding that the College is a
buyer in good faith. We hold that the RTC's finding that the College is a
buyer in good faith, which finding was upheld by the CA, was based on an
obvious misapprehension of facts and was clearly not supported by law and
jurisprudence.

I n .Bautzsta v. s1
1 va, PG
- we reiterate
d t h e reqms1tes
.c:
for one to b e
considered a purchaser in good faith:

A buyer for value in good faith is one who buys

property of another, without notice that some other person
has a right to, or interest in, such property and pays full and
fair price for the same, at the time of such purchase, or
before he has notice of the claim or interest of some other
persons in the property. He buys the property with the well-
founded belief that the person from whom he receives the
thing had title to the property and capacity to convey it.

To prove good faith, a buyer of registered and titled

land need only show that he relied on the face of the title to
the property. He need not prove that he made further
inquiry for he is not obliged to explore beyond the four
comers of the title. Such degree of proof of good faith,
however, is sufficient only when the following
121
Id. at 95.
122
Id. at 57.
m Id.
124
Rollo (G.R. Nos. 185857-58), p. 58.
125
Philippine National Bank v. Heirs of Estanislao MilitarlG.'. Nos. 16480 I & 165165, June 30, 2006,
494 SCRA 308, 319.
126
G.R. No. 157434, September 19, 2006, 502 SCRA 334.
 Decision 16 G.R. Nos. 185857-58
& 194314-15

conditions concur: first, the seller is the registered

owner of the land; second, the latter is in possession
thereof; and third, at the time of the sale, the buyer was
not aware of any claim or interest of some other person
in the property, or of any defect or restriction in the
title of the seller or in his capacity to convey title to the
property.

Absent one or two of the foregoing conditions, then the

law itself puts the buyer on notice and obliges the latter to
exercise a higher degree of diligence by scrutinizing the
certificate of title and examining all factual circumstances
in order to determine the seller's title and capacity to
transfer any interest in the property. Under such
circumstance, it is no longer sufficient for said buyer to
merely show that he relied on the face of the title; he must
now also show that he exercised reasonable precaution by
inquiring beyond the title. Failure to exercise such degree
of precaution makes him a buyer in bad faith. 127 (Emphasis
supplied.)

Thus, the College, which has the burden to prove the status of being a
purchaser in good faith, is required to prove the concurrence of the above
conditions. This onus probandi cannot be discharged by mere invocation of
the legal presumption of good faith. 128 We find that the College failed to
discharge this burden.

Firstly, as correctly pointed out by Gabutan, et al., Nacalaban, et al.

are not the registered owners of the property, but Godofredo. In Bautista v.
129
Court of Appeals, we held:

However, it is important to note that petitioners did not

buy the land from the registered owner, Dionisio Santiago.
They bought it from his heirs, Maria dela Cruz and Jose
Santiago.

Where a purchaser buys from one who is not the

registered owner himself: the law requires a higher degree
of prudence even if the land object of the transaction is
registered. One who buys from one who is not the
registered owner is expected to examine not only the
certificate of title but all factual circumstances necessary
for him to determine if there are any flaws in the title of the
transferor, or in his capacity to transfer the land. 130

Secondly, the College was aware that aside from Nacalaban, et al.,
the Heirs of Melecia, were also in possession of the property. The College
cited the tax declaration which bore an annotation that Melecia owned a
127
Id. at 346-348; cited in Uy v. Fu/e, G.R. No. 164961, June 30, 2014, 727 SCRA 456, 473-474.
128
See Sigaya v. Mayuga, G .R. No. 143254, August 18, 2005, 467 SCRA 341, 354, citing rotenciano v.

pti"
Reynoso, G.R. No. 140707, April 22, 2003, 401SCRA391, 401.
179 , , . I
- G.R. No. 106042, hbruary 28, 1994, 230 SCRA 446.
"" Id al 4 56, dt;ng R"'HI a and Fajacdo " G ahnd", I07 Ph; I. 480, 484 ( I960).
 Decision 17 G.R. Nos. 185857-58
& 194314-15

residential building and Godofredo owned the lot. 131 Also, apart from filing
an ejectment case against the Heirs of Melecia, the College retained part of
the purchase price for the demolition of Melecia's building as well. 132

In Decena v. Esponilla, 133 we held that petitioner-spouses were not

purchasers in good faith when they merely relied on the representation of
the seller regarding the nature of possession of the occupants of the land:

In the case at bar, we find that petitioner-spouses failed

to prove good faith in their purchase and registration of the
land. x x x At the trial, Tomas Occefia admitted that he
found houses built on the land during its ocular inspection
prior to his purchase. He relied on the representation of
vendor Arnold that these houses were owned by
squatters and that he was merely tolerating their
presence on the land. Tomas should have verified from
the occupants of the land the nature and authority of
their possession instead of merely relying on the
representation of the vendor that they were squatters,
having seen for himself that the land was occupied by
persons other than the vendor who was not in
possession of the land at that time. x x x 134 (Emphasis
supplied.)

Although the College in its Answer alleged that it made an exhaustive

investigation and verification from all reliable sources and found that the
possession of Melecia and her heirs was merely tolerated, 135 it failed to
specify who or what these sources were. There is no evidence that the
College did inquire from Melecia or her heirs themselves, who were
occupying the property, the nature and authority of their possession. It is not
far-fetched to conclude, therefore, that the College merely relied on the
representations of the sellers and the documents they presented. In this
regard, the College is not a buyer in good faith.

The "honesty of intention" which constitutes good faith implies a

freedom from knowledge of circumstances which ought to put a person
136
on inquiry. If the land purchased is in the possession of a person other
than the vendor, the purchaser must be wary and must investigate the rights
of the actual possessor. 137 Without such inquiry, the purchaser cannot be
said to be in good faith and cannot have any right over the property. 138

We are aware that in the ejectment case, the MTCC and RTC ruled in
favor of the College. We emphasize, though, that the ruling on the College's

131
Rollo(G.R. Nos. 185857-58), p. 192; 722-723.
132
TSN, September 16, 1998, pp. 12-15.
133
G.R. No. 156973, June 4, 2004, 431 SCRA 116.

1
134
Id. at 124.
135
Rollo (G.R. Nos. 185857-58), p. 133.
136
Occeiia v. Esponilla, supra.
137
Santiago v. Villamor, G.R. No. 168499, November 26, 2012, 686 SCRA 313, 321.
138
Id., citing Tio v. Abayata, G.R. No. 160898, June 27, 2008, 556 SCRA 175, 188-189 and Philip ine
National Bank v. Heirs o(Estanis/ao Militar, G.R. Nos. 164801 & 165165, 494 SCRA 308, 315.
 Decision 18 G.R. Nos. 185857-58
& 194314-15

better right of possession was without prejudice to the eventual outcome of

the reconveyance case where the issue of ownership was fully threshed out.
We have held that the sole issue for resolution in an unlawful detainer case
is physical or material possession of the property involved, independent of
any claim of ownership by any of the parties. When the defendant, however,
raises the defense of ownership in his pleadings and the question of
possession cannot be resolved without deciding the issue of ownership, the
issue of ownership shall be resolved only to determine the issue of
possession. 139 Thus, the ruling on the ejectment case is not conclusive as to
.
t l1e issue o f ownersl11p.
. 140

WHEREFORE, in view of the foregoing, the petition for certiorari

in G.R. Nos. 194314-14 is DENIED and the petition for review on
certiorari in G.R. Nos. 185857-58 is GRANTED. The Decision of the
Court of Appeals dated December 11, 2008 and its Resolution dated August
17, 2010 are AFFIRMED with the following MODIFICATIONS:

1. Cagayan Capitol College is hereby declared a buyer in bad faith, who

has no right to possession and ownership of the property;

2. Nacalaban, et al. are ordered to return the purchase price paid on the
property to the College, plus interest at the rate of six percent (6%) per
annum computed from July 23, 1997' 41 until the date of finality of this
judgment. The total amount shall thereafter earn interest at the rate of
six percent (6%) per annum from the finality of judgment until its
. f:act10n;
sat1s . 142
an d

3. The Register of Deeds is ordered to cancel TCT No. T-111846 in the

name of the College.

4. The property should be reconveyed to the Estate of the late Melecia

Oalondonan with the institution of the proper proceedings for its
partition and titling.

SO ORDERED.

Associate Justice

119
Gov. looyuko, G.R. No. 196529, July I, 2013, 700 SCRA 313, 319.
140
Rodriguez v. Rodriguez, G.R. No. 175720, September 11, 2007, 532 SCRA 642, 653.
141
Date of filing of the College's Answer with Affirmative Defenses, rollo (G.R. Nos. 185857-58), p. 43.
142
Nacar v. Gallery Frames, G.R. No. 189871, August 13, 2013, 703 SCRA 439, 457-458.
 Decision 19 G.R. Nos. 185857-58
& 194314-15

WE CONCUR:

PRESBITERO J(~ELASCO, JR.

Ass;:J_,~te Justice
mrperson
7
J
'Associate Justice

IENVENIDO L. REYES
Associate Justice

ATTESTATION

I attest that the conclusions in the abov~ecision had been reached in

consultation before the cases were assigneglto the writer of the opinion of
the Court's Division.

J. VELASCO, JR.
Ass/ciate Justice
Chairpe/-son, Third Division

CERTIFICATION

Pursuant to Section 13, Article VIII of the Constitution, and the

Division Chairperson's attestation, it is hereby certified that the conclusions
in the above Decision had been reached in consultation before the cases
were assigned to the writer of the opinion of the Court's Division.

MARIA LOURDES P. A~iRENO

Chief.Justice r
CO/t-t:D TRUE COPY

wrcrn#L~i-
nivision Clerk of Court
Tb~rd Division
AUG O4 2016